Business Desk: The central government has reduced the windfall tax on the export of petrol, diesel and aviation fuel i.e. ATF. According to the notification issued by the Finance Ministry, the new rates have come into effect from August 14.
The government has completely abolished the tax on export of petrol, while duty relief has also been given on diesel and jet fuel. However, this decision will not have any direct impact on the prices of petrol and diesel sold in the domestic market.
The biggest relief has been given to petrol exporting companies. The tax of Rs 3.5 per liter imposed on export of petrol on August 3 has now been reduced to zero. At the same time, the duty on diesel and ATF has also been reduced. The new system will mainly benefit refineries and companies exporting fuel abroad.
Export duty also reduced on Diesel and ATF
The government has reduced the Special Additional Excise Duty (SAED) on export of diesel from Rs 25.5 to Rs 24 per litre. Similarly, export duty on ATF i.e. Aviation Turbine Fuel has been reduced from Rs 22 to Rs 19.5 per liter.
In case of petrol, the entire duty has been removed. That means now there will be no windfall tax on petrol export. With this decision of the government, the tax burden on export of all three fuel categories has been reduced.
- Petrol: reduced from Rs 3.5 to Rs 0 per liter
- Diesel: reduced from Rs 25.5 to Rs 24 per liter
- ATF: reduced from Rs 22 to Rs 19.5 per liter
There is no effect on the prices of petrol and diesel in the domestic market.
The Finance Ministry has clarified that due to this change there is no change in the existing duty rates of petrol and diesel sold in the domestic market. This means that the prices of petrol and diesel for common consumers will not be directly affected by this decision.
This change is only related to fuel export. This will affect those refineries and oil companies that sell petrol, diesel and ATF produced in India in foreign markets.
What is Windfall Tax, why did the government impose it?
Windfall Tax is an additional tax that is imposed on companies on additional profits made in sudden and extraordinary circumstances. The government had imposed this tax on fuel export at a time when crude oil prices had increased in the international market due to tension and war-like circumstances in the Middle East.
During this period, Indian oil refining companies were getting more profits by selling fuel in foreign markets than in the domestic market. The objective of the government was to control this extra profit and maintain adequate availability of fuel in the country.
Tax started from Diesel-ATF in March
The government had imposed tax on export of diesel and ATF for the first time on March 27. After this, windfall tax was also implemented on petrol export from May 16.
After this, the government has been revising these tax rates from time to time based on changes in international crude prices and refining margins. Now in the new review, export duty on petrol has been completely abolished, while duty on diesel and ATF has also been reduced.
Windfall Tax is reviewed every 14-15 days.
The government reviews international crude oil prices and refining margins every 14 to 15 days. On this basis, the rates of windfall tax are changed.
If the price of crude oil and refining margins soften in the global market, the government can reduce the windfall tax. At the same time, if there is an increase in prices and margins, the tax can be changed again.
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